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Google Inc. Is Finally Loosening Its Iron Grip on Android

Manufacturers won't have to pre-install as many Google apps as before.

Android is an open-source and mostly free-to-use mobile operating system, but if a manufacturer wants all the benefits of the Android ecosystem, it has to play by Google's (NASDAQ:GOOG)(NASDAQ:GOOGL) rules. If a smartphone maker wants to take advantage of the Google Play store and the APIs Google built, it has to install as many as 20 Google apps -- take it or leave it.

This agreement puts manufacturers such as Samsung ata disadvantage in establishing their own services or providing a unique user experience to differentiate their products. But with the upcoming release of its Galaxy Note 5 and Galaxy S6 Edge Plus, Samsung is getting somewhat of a reprieve. Google will no longer require manufacturers to pre-install mostly unused apps, including Google+ and Google Newsstand. Altogether, Google lowered the requirements by six apps.

Why is Google doing this?Google isn't doing this just to be nice to smartphone OEMs and Android users. It's a business, and it does what's best for business.

Earlier this year, the European Commission opened an antitrust investigation into Google's Android policy. That's something I and others warned could happen after it increased the number of apps it required manufacturers to pre-install.

At the heart of the antitrust allegations is the argument that Google's pre-installed apps inhibit competing services from being successful. Control of the API means that Google also controls how apps interact with each other. So, for example, clicking on an address automatically opens Google Maps instead of a user's preferred maps app.

Of course, Apple is no different in this regard. It continues to load more pre-installed apps with each iOS release, and users are unable to delete them. It also opens up its first-party apps for things such as mapping and reminders. But the big difference is that Cupertino doesn't force other manufacturers to install its apps, nor does it control 80% of the smartphone market.

Google's actions have made it impossible for a smartphone OEM to significantly differentiate itself. Developing a new mobile OS is easy enough, but developing an ecosystem of apps and users is tremendously difficult because of walled access to Google's APIs, which allow apps to send push notifications and interact with other apps.

The reduced number of pre-installed apps, and thus the reduced screen real estate they require, may be a peace offering from Google,a pre-emptive action taken to quell the response of the European Commission.

Another reason to reduce bloatGoogle is in the midst of making a big push into emerging markets such as India. The company faces significant competition in India from smartphone OEMs that have chosen to abandon Google for alternative OSes. Those manufacturers include Xiaomi and OnePlus, which both entered India late last year, and native Micromax.

To compete, Google launched its Android One initiative to develop smartphones that retail for around $100. The phones run stock versions of Android, with very little customization from manufacturers. These low-end phones don't have the specs to run all of Google's apps, so reducing bloatware will allow for a better user experience.

The same is true for manufacturers looking to go the traditional Android route in other markets. To keep costs down, they need to reduce the amount of bloat pre-installed on the device. Otherwise, the user experience suffers and nobody buys the phone.

Reducing the amount of pre-installed apps on Android may be a test to spur adoption of Android in emerging markets.

While Android still dominates the smartphone market, it's losing market share to Apple and Microsoft. The most recent IDC survey found Android's share of the market fell to 78% in the first quarter, down from 81.2% in the year-ago period. Those numbers include the versions of Android that don't use Google's apps, so Google's share of the market is even lower. Regaining control in emerging markets could help get it back on track.

Loosening the iron gripManufacturers and consumers should be happy with Google's decision to reduce the number of required pre-installed apps on Android. But investors should note the reasons Google decided to take that action.

On the face of it, more apps equal more opportunities to advertise. But when you dig into the details, the huge number of apps could be doing more harm than good. We'll see how Google's decision affects Android adoption going forward.

Author

Adam has been writing for The Motley Fool since 2012 covering consumer goods and technology companies. He consumes copious cups of coffee, and he loves alliteration. He spends about as much time thinking about Facebook and Twitter's businesses as he does using their products. For some lighthearted stock commentary and occasional St. Louis Cardinals mania ... Follow @admlvy